News Excerpt:

A study commissioned by the Union Ministry of Housing and Urban Affairs was carried out by the Centre for Analytical Finance of the Indian School of Business (ISB). It showed how the income of street vendors were increased through PM Street Vendor’s Atma Nirbhar Nidhi (PM SVANidhi) scheme

Summary of the report

• The study reveals that the PM SVANidhi scheme resulted in an additional annual income of Rs 23,460 for each beneficiary who availed the first tranche of Rs 10,000.
• Data on the PM-SVANidhi portal showed that 60.65 lakh first-term loans, 16.95 lakh second-term loans and 2.43 lakh third-term loans have been disbursed so far under the scheme.
• The study covered 5,141 vendors across 22 states. It showed that 94% of first-loan beneficiaries used the funds for business investments.
• Despite a 13.9% NPA rate during the Covid-19 pandemic, the study highlights a decline in NPAs over time.
• The study also found that the debt-to-income (DTI) ratio of the beneficiaries (9%) was lower than what was expected of small businesses, reflecting the “high creditworthiness” of the vendors.
• However, the study also found that after the launch of PM SVANidhi, there had been no significant improvement in the street vendors getting formal credit from other sources — only 9% of the beneficiaries had loans from other financial institutions.

About PM SVANidhi scheme:

Background:

• It comes under the Ministry of Housing and Urban Affairs.
• PM SVANidhi was launched in 2020 to help street vendors resume their livelihood impacted by the Covid-19 lockdown, by offering them affordable working capital loans.
• Feature of the scheme:
• A beneficiary can avail a Working Capital (WC) loan of up to Rs. 10,000 and, upon its repayment, Rs. 20,000. After repaying the second loan, a beneficiary is entitled to apply for a third loan of Rs. 50,000.
• No collateral will be taken by the lending institutions. On timely or early repayment, the vendors will be eligible for the next cycle of working capital loan with an enhanced limit.
• No prepayment penalty will be charged from the vendors for repayment before the scheduled date.